corporate governance - Tamkeen Consult homepage

DNA 

Newsletter 2010 

Apr - June Issue N0. 2 

Letter from 

the CEO 

Corporate Governance 

in KSA 


in GCC 


Internationally 

Upcoming 

Events

1. Letter 

from the CEO 

Dear Readers, 

Continuing in our effort to provide you with updated information about Corporate Social Responsibility (CSR) 

and related topics, I am delighted to present Tamkeen Sustainability Advisors’ second circulated newsletter. 

This issue examines the link between Corporate Social Responsibility and Corporate Governance and how 

more and more companies, both at international and regional level are recognizing the importance of a good 

governance structure in building a more responsible and more profitable corporation. 

Through this issue, I would like to share our latest accomplishment with you, the release of our second nationwide 

study on the evolution of CSR in Saudi Arabia. The key findings of the study have been highlighted in the 

news section of the newsletter. 

In this issue, we hope to broaden your knowledge of the intricacies of corporate governance in the Gulf 

region, and what good governance means for business growth and development. As the Capital Market 

Authority (CMA) in Saudi Arabia moves in the direction of institutionalizing governance policies and regulations, 

how companies shift their internal regulations and increase transparency against global best practices 

becomes crucial for their survival and progression, especially during difficult economic times. 

As we continue to grow our expertise and knowledge of all aspects of CSR in the region, we happily share this 

knowledge with you, striving to encourage an environment of transparency, responsibility, and sustainable 

business practices. 

Sincerely, 

Asya AlAshaikh

2. News 

Tamkeen 

tamkeen releases study on the 

evolution of csr in ksa 

Tamkeen Sustainability Advisors released its second 

study on the evolution of Corporate Social Responsibility 

(CSR) in KSA, and has gained positive media 

coverage in newspapers such as Al-Hayat and Arab 

News. The initiation of the study was to assess how 

companies address CSR and how the corporate 

perception has changed over the past two years since 

our first CSR study in 2007. 

The study showed that CSR is gaining a lot of 

momentum in the business world, government 

policies, industry events, advertising space, and other 

arenas throughout Saudi Arabia, but that the spread is 

largely superficial and its overall impact remains 

limited. The study then goes on to examine why the 

situation is so and draws valuable conclusions. 

For the purpose of the study, we examined the CSR 

landscape in the kingdom from different perspectives 

such as; focus on national development priorities, 

strength of External CSR drivers, clarity of Internal 

CSR Drivers, and availability of CSR assessment 

tools. The study was supported by surveying 45 

selected Saudi companies from the top corporate 

performers including family owned, publicly listed, 

and privately owned companies.

some of the key findings from the study are summarized below: 

Only 5% of respondents measure the effectiveness of their CSR/philanthropic activities. 

When asked if they acknowledge the need for an external assessment tool, 25% of the business leaders 

support a generic tool, while 70% of them stressed the need to have this tool ownership, culture and industry 

sensitive. 5% of business leaders however do not see any merit in an external assessment tool. 

A search in the archives of the top 5 Saudi newspapers on Corporate Social Responsibilities and variations of the 

term shows an increase by more than 12 folds from 2005 to 2009 reaching 6481 hits. 

When attempting to define the obstacles facing the adoption of responsible practices, 85% of business leaders have 

identified the government / regulatory framework as the main challenge. 

60% of the respondents feel that the general public and average consumer is largely unaware about the significance 

and far-reaching impact of CSR. 

The study recognizes the need to have a more active 

role from the governmental authorities in terms of 

encouraging CSR and gave important recommendations 

in that regard. 

The role of media has also been addressed as one of 

the key driving forces for the evolution of CSR. 

The study draws attention to the lack of available 

assessment tools to help companies monitor and 

better plan their CSR initiatives and provides recommendations 

in that regard. 

Perhaps the most resounding recommendation from 

the study is the need to define the roles of all players 

in the CSR context and that all the key players 

support CSR by engaging with universities and 

business schools to promote multidisciplinary 

research and education on CSR. 

While only 10% of the companies attempt to align their philanthropic programs with the national priority needs, 28% 

acknowledge the need but do not act on it. This leaves us with 62% of the companies that do not consider aligning 

their contributions to national priorities a primary need.

snap shot: corporate 

governance in saudi companies 

3.corporate 

governance 

in KSA 

The table below captures a few of the many examples from Saudi companies who are rapidly adopting open and transparent governance structures, either to comply with the CMA 

regulations or to create a competitive edge. However, many of these companies need to continue their efforts in taking this one step further and try to embed the principles in their 

overall business strategy in order to have a meaningful impact and reap business benefits. 

Company 

Jarir 

(One of the largest bookstores in the Arab World, 

and one of the best performing on the Saudi stock market) 

Savola 

STC 

Their take on Corporate Governance 

Has separated management from family and family owners early on; have had a clear governance structure 

since the 1990s; are publicly traded and the majority of the review committee are not family members; the 

board of directors is there to ensure compliance with company policy and ethical business practices such as 

trust and transparency 

Savola has a clear “Corporate Governance Code” since 2004 in which it pledges to commit to its values 

toward shareholders and employees. The CG and CSR Board committee is selected from the board of directors 

and complies with Saudi CG rules and internal byelaws. This is easily accessible online and is public to 

anyone interested in learning about the governance structure and board responsibilities. 

STC has a CG policy that follows CMA regulations integrated with international best practices, working 

internally and with an external consultant to ensure that these measures are met. The idea of gathering all STC 

CG principles in one document was initiated in the beginning of 2004, where it covers worldwide generally 

accepted Corporate Governance requirements, STC issued resolutions related to corporate governance, laws 

and its related by-laws issued in Saudi Arabia, because most of principles have been covered in a way or other 

in the company law, Capital Market law and related by-laws, regulation and resolution, and other related laws.

development of corporate 

governance in gcc 

4.corporatein the region 


Countries in the gulf region are witnessing a shift in the attention given to corporate governance. However, while some governments are in the phase of mandatory implementation 

of corporate governance regulations, others are still working on educating companies on its significance for corporate sustainability. The table below shows how corporate governance 

has developed in countries of the gulf region: 

Scope/Event 

When & Where 

By Who 

Highlights 

Assessment report 

of corporate 


September, 2008 - 

The Gulf Region 

The National Investor (TNI) 

and Hawkamah, the Institute 

for Corporate Governance 

The ranking of companies in the report were based upon Behavioral 

Assessment Score for Investors and Corporations (BASIC) 

BASIC is a comprehensive, systematic and quantitative ranking of GCC 

listed stocks. It measures 43 parameters within three main areas: trading 

history, corporate communications and disclosure. 

Bahrain landed on top of the Gulf list, closely followed by Oman. 

KSA and Kuwait, although have most liquid and mature markets in the 

region, scored the lowest as only one third of companies there publish 

their annual reports in English. 

Report showed that less than one in ten GCC companies preannounce 

their results publication dates, two in five have no website, and only 

two percent of GCC companies hold analyst meetings.

Scope/Event 

When & Where 

By Who 

Highlights 

Approval of 

Corporate 

Governance 

Code 

February, 2009 - 

Qatar 

The Qatar Financial 

Markets Authority (QFMA) 

in collaboration with 

Hawkamah institute for 

corporate governance. 

The code is applicable for listed and public companies in Qatar contained 

detailed guidelines on corporate governance in line with international 

norms and practices 

The Code is implemented on a comply-or-explain basis. 

The Code granted the QFMA the discretionary authority to enforce 

provisions of the Code. 

First ICD 

(Investment 

Corporation of 

Dubai) Finance 

Conference 

May, 2009 - 

Dubai, UAE 

Under patronage of H.H. 

Sheikh Ahmed Bin 

Saeed Al Maktoum 

First in a series of such events to encourage dialogue and best practice 

amongst the organization’s portfolio companies. 

Included more than 150 senior executives from ICD portfolio companies 

Focused on risk and corporate governance. 

Aimed at enhancing development of standards of governance and 

risk management within its group of companies. 

The Corporate 

Governance Code 

conference of the 

Kingdom of 

Bahrain 

May, 2009 – 

The Kingdom 

of Bahrain 

Under the patronage of the 

Central Bank of Bahrain & 

organized by the International 

Chamber of Commerce 

in Bahrain (ICC) 

The Purpose was to establish highest standards of corporate governance 

practices and to provide protection for investors and other company 

stakeholders through compliance with those practices. 

Aimed to make the corporate governance systems transparent and 

understandable for both national and international investors. 

The code will be applicable to all companies that are incorporated 

under the Bahraini Commercial Law.

Scope/Event 

When & Where 

By Who 

Highlights 

Corporate 


workshop 

January, 2010 - 

Abu Dhabi, UAE. 

The State Audit 

Institution of UAE 

Held for Federal Government top officials to bring to light the importance 

of corporate governance, and how to implement it in the SAI's audit 

methodology. 

Will be held periodically to develop standard national word concept, reach 

performance level required and go hand in hand with the stages of 

development in the UAE 

Aimed to enhance governance practices and communication, and increase 

transparency and consultation between the SAI and Federal Ministries. 

Focused on the overall significance of setting corporate standards, as well 

as adopting best international practices in implementing integrated 

governance, controlling public money and enhancing responsibility. 

The set deadline for the mandatory implementation of corporate 

governance regulations in the UAE is on April 2010 

Developing of 

First Environment, 

Social and 

Governance Index 


Middle East and 

North Africa 

IFC (International Finance 

Corporation) a member 

of the World Bank Group 

Developed to support efforts of the Hawkamah Institute for Corporate 

Governance, indices and ratings provider Standard & Poor’s, and Credit 

Rating and Information Services of India Ltd. (CRISIL). 

Countries included are the United Arab Emirates, Saudi Arabia, Qatar, 

Bahrain, Oman, Kuwait, Jordan, Egypt, Lebanon, Morocco, and Tunisia. 

The index will provide qualitative data for investors’ sustainability needs, 

absorb high liquidity growth, and reduce volatility of stock markets. 

Will measure the environmental, social, and corporate governance 

performance of all corporations listed in the region. 

The index will serve approximately 600 listed companies in 11 countries.

Scope/Event 

When & Where 

By Who 

Highlights 

Issued decision 

of establishing 

specialized centre 

for corporate 



Oman. 

The Omani MUSCAT - 

The Capital Market 

Authority 

Aims to enhance the level of corporate governance practices 

The objective is to increase the share of knowledge in the field of 

corporate governance 

Will provide technical and administrative consultancy for the boards 

of companies related. 

Will work on establishment of database on corporate governance related 

matters to serve large sectors. 

Plans to conduct studies and release publications for public awareness 

of latest global developments and practices in the field. 

Issued decision 

of establishing 

Riyadh 

Competitiveness 

Centre 


Riyadh, KSA 

Prince Salman bin 

Abdulaziz, Governor of 

Riyadh Region. 

Aims at enhancing Riyadh City's competitiveness level to cope with 

global economical development. 

The overall objective is to develop a sound investment environment 

that would appeal to the private sector companies, businessmen and 

investors wanting to develop establishments in Riyadh. 

Corporate 

Governance 

Symposium 

February, 2010 - 

Riyadh, KSA 

The Saudi Capital 

Market Authority (CMA) 

in Cooperation with the 

Swedish Trade Council 

Included top business leaders from both countries 

Aimed at educating stakeholders and companies on best international 

practices and its significance for corporate sustainability. 

Highlighted the role and responsibilities of Board Members and audit 

committees, Governance in Family Businesses 

The Swedish Trade Council detailed required process and procedures 

for application of good corporate governance. 

The Swedish Trade Council also explained the necessity of corporate 

governance in order to build trust of international investors through 

transparency, and the need of aligning it with the external environment.

References 

1 http://www.hawkamah.org/publications/cg_reports/files/BASIC_ 

Final_25Aug08.pdf 

2 http://gulfnews.com/business/general/state-audit-institutionconducts-workshop-on-corporate-governance-1.571807?localLinksE 

nabled=false 

3 http://www.ifc.org/ifcext/pressroom/ifcpressroom.nsf/PressRelea 

se?openform&F31E90D7D7D90A79852576AA0053E3EE 

4 http://www.cma.org.sa/cgd/index.html 

5 http://www.riyadh.gov.sa/Fr/FranNewsDetails.asp?GetVarID=302 

6 http://www.omannews.gov.om/ona/english/newsDetails.jsp?new 

sID=26715 

7 http://www.ameinfo.com/198461.html 

8 http://www.cipe.org/regional/menacg/pdf/Bahrain%20CORPO 

RATE%20GOVERNANCE%20CODE.pdf 


corporate governance: 

the why and the how 

international level 

The Organization for Economic Cooperation and 

Development (OECD) has a set of principles that 

defines corporate governance as involving "a set of 

relationships between a company's management, its 

board, its shareholders, and other stakeholders" 

(OECD, 2004). In other words, corporate governance 

is the manner in which companies are run, 

referring to publicly listed companies. The factors 

taken into consideration when running 

a company are: 

1. The rights of shareholders and key 

ownership function 

2. Equal treatment of shareholders 

3. Role of stakeholders 

4. Disclosure and transparency 

5. Responsibilities of the board 

These are the factors that make up the principles of 

corporate governance as outlined by the OECD, in 

addition to ensuring the basis for an effective 

corporate governance framework. 

These principles were endorsed in 1999 in an effort 

to assist governments in their efforts to evaluate and 

improve the legal, institutional and regulatory framework 

for corporate governance.[1] 

The Institute of International Finance also has a set 

of policies on corporate governance, which include 

the same regulations as the OECD principles, but 

explicitly include accounting and auditing and minority 

shareholder protection. 

regional level 

Although at the time the region was significantly 

lagging behind the rest of the world, the year 2006 

marked a turning point for CG in the GCC region[2] 

for several reasons: A downward price adjustment in 

the region’s stock markets, increased activity by GCC 

corporations in world markets, and the opening up of 

the GCC stock markets to foreign investors. 

At the time, Oman had the strongest CG framework, 

and was the only country with a Code of Corporate 

Governance, followed by Kuwait and Saudi Arabia, 

followed by Bahrain and UAE, followed in last place by 

Qatar[3].

Although the factors mentioned above have pushed 

the GCC to adopt CG standards on some level since, 

the GCC generally remains fairly isolated from the 

global economy, and the weak regulatory environments 

have left much to be desired in terms of implementing 

change and institutionalizing it. 

CG structures vary around the world, and countries 

often develop standards based on culture and history. 

Therefore, countries in the GCC need to take the 

historical background of tribal affiliations and the lack 

of transparency into consideration when attempting to 

standardize regulations. 

Regionally, Hawkamah, the Dubai-based Institute of 

Corporate Governance works to align GCC standards 

with international best-practices. A regional survey 

conducted by Hawkamah in 2008 revealed that no 

publicly listed company in the MENA region followed 

best practice, and only 3% of surveyed firms followed 

good practice[4]. 

An April 2009 study, however, showed that two thirds 

of the companies surveyed improved their CG practices 

in the past year. Hawkamah works with different 

institutions to develop and promote stronger standards 

and guidelines. For instance, I April of 2009 

Hawkamah announced the development of a code of 

corporate governance in cooperation with the Qatar 

Financial Markets Authority[5]. 

national level 

Saudi Arabia, while still a developing country, is unique 

in many ways considering its GDP. The amount of 

money available for economic and social development 

is significantly higher than most developing economies, 

and so the secret in the success of the country’s 

development remains in how well this development 

process is planned, implemented and monitored. 

As the economy continues to grow, and the country’s 

financial markets continue to mature, it is clear that a 

set of guidelines on how this wealth is managed 

publicly as well as within the private companies is 

needed. 

According to the World Bank, development goals are 

more easily met, and living standards are raised when 

laws are upheld, contracts are enforceable, and new 

businesses do not face too many barriers to entry.[6] 

Therefore, having a set of guidelines that regulate how 

businesses run and are governed, namely, having a 

code of corporate governance in a country is necessary 

to reach national development priorities and 

economic growth.

In Saudi Arabia, the second country in the GCC to 

adopt CG regulations, the Corporate Governance 

Regulations were issued by the Capital Markets 

Authority (CMA) in December 2006, but faced 

challenges in areas such as information disclosure by 

listed companies; fair valuation of new issues; and 

cross-listing of stocks on regional stock exchanges. 

In the shadow of the 2008 global financial crisis, there 

is a clear recognition of the need for corporate governance, 

and the CMA continues to redesign policies 

and re-work standards to accommodate this need. 

On February 9th, 2010, the CMA held a corporate 

governance conference, in which Dr. Abdulrahman Al 

Tuwaijiri, the Chairman of the CMA, emphasized the 

CMA’s desire to develop governance standards, 

stressing the importance of private companies’ cooperation 

and transparency on this front. 

what does the future hold? 

the two main goals: 

1. Enforceable regulations for listed companies 

2. Guidelines for non-listed companies 

The regulatory framework in which companies operate 

in the GCC is often blamed for a poor implementation 

of CG guidelines and the lag in the adoption of a 

code of corporate governance. As the GCC stock 

markets continue to open up to foreign investors, and 

the region continues to attract foreign investors, 

however, there will need to be a genuine shift toward 

adopting regulations within private companies that 

take these new shareholders’ rights into 

consideration—ignoring this need will lead to a push 

away from investing in the GCC. 

In order to get companies to commit to corporate 

governance guidelines, there must be an improvement 

in the regulatory framework, and a stronger commitment 

from political authorities in the GCC countries. 

Regulators in the region as a whole should work closer 

together on standardizing and formalizing the guidelines 

and reporting requirements. There is also a 

recommendation to have specialized courts to deal 

with the enforcement of securities[7]. 

One of the most frequently cited obstacles to implementing 

corporate governance standards in the Gulf 

comes from the nature of the market: many private 

companies are family owned businesses and these are 

often reluctant to adopt more transparent policies, 

thus limiting their ability to go public within a regulated 

environment. 

A McKinsey study showed that more than 5000 

GCC family firms hold assets worth over $500 

billion, and these firms are an intrinsic part of the 

GCC communities. However, as these companies 

begin moving to third generation control, the decision 

to go public often encourages them to explore 

corporate governance frameworks[8]. The current 

weak CG practices are putting pressure on the 

continued success of family businesses, to ensure 

that they survive the generational transition and 

continue to compete[9]. 

In conclusion, it is interesting to note that although 

there is a genuine shift toward adopting more solid 

corporate governance standards in the different 

GCC countries, and by the CMA in Saudi Arabia, Mr. 

Schutzmann of SHUAA Capital warns that even with 

the existence of regulations in other parts of the 

world, where the principles of good corporate 

governance have been established longer than in the 

Gulf, scandals linked to a lack of transparency continues 

to happen “Having rules and regulations in 

place doesn’t mean these things will never happen,” 

he says. “But we can create an environment in which 

they are less likely to happen, an environment in 

which investors can have confidence.[10]”

corporate social responsibility 

and corporate governance 

5.corporate 


on an international level 

Businesses undoubtedly are the key drivers of change 

when it comes to economic growth and development 

of a country. However, in order to ensure that the 

growth of a business is sustainable and that they 

contribute positively to the national development 

agenda; they need to adopt good corporate governance 

policies that ensure that their behavior is not 

just protecting their shareholders, but taking all 

stakeholders into consideration. 

Corporate governance refers to the way in which 

businesses are run, specifically publicly owned companies. 

In this context, ‘running a company’ under the 

terms of good corporate governance refers to ensuring 

that the board of directors is diverse, as to be representative 

of the company’s shareholders, so a 

company’s decisions do not harm shareholders or 

other stakeholders, but it also involves ensuring the 

information is accurate, and sharing the board’s 

decisions with shareholders and stakeholders alike. 

There are several protocols through which this is 

done: annual shareholders meetings, disclosing 

annual reports, and including auditing committees. 

When companies share this information with their 

stakeholders, they exhibit transparency which is a key 

element of good governance and therefore good 

social responsibility. 

Corporate governance converges with corporate 

social responsibility on more than one level. Corporate 

governance is about establishing the framework 

of rules and practices by which a board of directors 

ensures accountability, fairness and transparency in 

the firm’s relationship with stakeholders. CSR is 

about managing business to have an overall positive 

impact on people, the planet and profits.

When CSR is embedded into the core business 

strategy of a company, then the governance framework 

will work to achieve CSR goals — as in, the 

business as a whole will be governed through a 

framework that not just discloses its actions to the 

stakeholders, but ensures that these actions are fair 

to all stakeholders, including society and the environment. 

Companies that want to engage in CSR 

often think of CSR as the add-on cost of philanthropic 

contributions at the end of the year. However, 

when viewed as part and parcel of the governance 

structure, and the guiding principles by which 

a company is run, the two go hand in hand. 

A study commissioned by the Canadian Cooperative 

Association showed that many companies believed 

that CSR connects to governance at the values level. 

These companies believe governance and CSR to be 

the same thing. When corporate governance is 

guided by ethics and values, a corporate philosophy 

governing medium and long-term actions reconciles 

short-term profits with long-term profitability. The 

study shows that those who believe that good governance 

and CSR are the same are driven by the desire 

to ensure that some stakeholders’ rights aren’t 

compromised by serving others. They also recognize 

that in order to produce long term quality and 

sustained market leadership companies must motivate 

employees. 

However, many believe it is a wishful thinking to 

hope that businesses will act ethically and transparently 

out of good faith. Although some companies 

are driven by values, others believe that ethical 

business is primarily necessary for risk management 

and therefore business strategy. In this case, boards 

have a responsibility to address risks, and CSR is 

seen as risk management. They believe that effective 

management of CSR risks and opportunities can 

improve financial results. Those who believe that 

the main reason to adopt governance strategies have 

to do with risk management are concerned with the 

materiality certain CSR issues have for companies, 

being so significant that board interference is 

needed to make decisions. 

What seems to matter in the end is that even when 

ethics aren’t the main driver for adopting CSRinspired 

corporate governance, corporate scandals 

and globalization pave the road toward including 

CSR issues in good corporate governance strategies. 

Bad corporate governance has proven to be 

detrimental—think Lehman Brothers and the Saad 

and Al Gosaibi conglomerates.

good governance means 

good business 

Although corporate governance in GCC has largely 

been depicted as a concept that talks about mandatory 

compliance, codes and rules; business leaders 

around the world are now recognizing the value of 

good governance towards making good business 

sense. 

To put it simply, sound corporate governance principles 

have the ability to relegate market volatility, 

enhance institutional investment, boost the 

company’s reputation and promote sustainability and 

growth. 

Global corporations after recognizing the business 

value of good governance are now pushing towards 

putting in place a combination of internal controls, 

explicit businesses processes and systems for corporate 

governance that can, through effective implementation, 

also build business value. 

If we were to examine the Business case of CG, we 

may wonder why companies are hesitant in adopting 

good CG practice. The trouble is that in racing to 

comply with the mandatory CG regulations, many 

companies have complained that they lack the time 

necessary to develop a cohesive strategy to ensure 

their compliance efforts will also benefit their 

business in other ways. 

This in turn makes it hard for the regulators to stress 

upon the need for good CG practice as something 

companies should engage in voluntarily and not just 

for compliance reasons. 

In the following paragraphs, we will look 

at few of the many disclosure items as per 

the internationally agreed CG frameworks 

and how they help companies do better 

business: 

01 

independent board means better 

decision making. A key attribute of an 

effective board is that it comprises of a majority of 

independent directors. While not necessarily true, a 

board with a majority of insiders is often viewed as 

ineffective especially if the CEO is also the Chairman of 

the Board. 

An independent director is someone who has never 

worked at the company, is not related to any of the key 

employees and has never worked for a major supplier, 

customer or service provider, such as lawyers, accoun- 

tants, consultants, investment bankers, etc. This makes 

the board more independent and allows the business to 

make decisions which enhance shareholder value 

rather than serve the interests of the directors only. 

The importance of independent board is emphasized by 

a recent Wall Street Journal article, where it was found 

that independent outsiders made up 66% of all boards 

and 72% of Standard & Poor's (S&P) boards across US.

02 

audit committee means better 

accountability. Audit committees are 

responsible for helping a company achieve its objec- 

tives through reliable financial reporting, operating 

efficiency, and compliance with laws and regulations. 

They therefore need to ensure accountability on the 

part of management and internal and external audi- 

tors; make certain all groups involved in the financial 

reporting and internal controls process understand 

their roles; and safeguard the overall objectivity of the 

financial reporting and internal controls. 

Typically, the role of the Audit Committee is to over- 

see, monitor, and advise company management and 

auditors in preparing financial statements. But in the 

wake of recent corporate scandals, the new challenge 

for audit committees is to shift to a more proactive 

oversight role and ensure the accountability of com- 

pany management in all aspects of the business. 

03 

disclosure about executives 

means transparency. As part of their CG 

agenda, organizations should clarify and make 

publicly known the roles and responsibilities of the 

board and the management in order to be transparent 

toward their shareholders. 

Disclosure of material matters concerning the organi- 

zation should be timely and balanced to ensure that all 

investors have access to clear, factual information. 

Some international CG frameworks emphasize the 

importance of disclosing the pay and benefits of all 

company executives in order to gain shareholder trust 

through transparency of information. 

04 

Minority Rights means maximization 

of shareholder value. To guard 

against oppression from the majority shareholders, 

most international CG frameworks give minority 

shareholders certain rights. 

While precise rules in each country vary, several prin- 

ciples have emerged over the last few years to protect all 

shareholders, including those in the minority, from 

oppression. One of the many rights minority sharehold- 

ers can enjoy under a solid CG framework is the right to 

inspect corporate books, papers and records. This right 

allows shareholders to protect themselves against 

mismanagement by or disloyalty of corporate managers 

or other shareholders. The right, of course, may be 

limited by the corporation to allow its exercise for 

proper purposes and at certain times and places 

Despite vigorous efforts from the corporate regulators, 

CG remains a vague and often misunderstood term. 

However, as more companies are waking up to the 

reality of business value of a solid CG framework, they 

agree that corporate governance must go well beyond 

mandatory compliance. 

The quantity, quality and frequency of financial and 

managerial disclosure, the degree and extent to which 

the board of Director exercise ethics in dealing with 

shareholders, and the roles and responsibilities of audit 

committees should be constantly evolving. This evolu- 

tion over time will help build an organization that is 

ready for any challenge, has the trust of its shareholders 

and is well-prepared to deal with unforeseen corporate 

catastrophes.

6. dna 

injected 

This section is dedicated to our 

International partners to inject their 

knowledge into our Saudi DNA. 

TOMORROW’S COMPANY 

The virtuous circle of governance is a joined-up way 

of thinking about success. It means linking together 

every conversation about business planning, measurement, 

and the boardroom agenda, with the 

production/audit of the annual report (and other 

reports), the annual meeting, and stakeholder 

dialogue – all as part of the same logic. 

Reporting on performance provides verification of 

whether or not the company has achieved what it set 

out to do. This in turn allows it to understand whether 

or not it has correctly identified its key relationships 

and success model, and to change these as necessary. 

This allows it to define how to measure its success 

model, so that it can be communicated. There is 

also another set of impacts that flow in the opposite 

direction. 

Communicating (for example through an annual 

report) forces the company to define what measures 

it is going to report on. This in turn forces it to be 

clear about what its success model is, and what the 

key relationships are which enable that model to 

succeed. This also forces the company to be clear 

about what it means by success: what it is setting out 

to achieve. This is why companies find non-financial 

reporting difficult – because it forces them to be 

explicit about the success they seek and what drives 

it. It also explains why those that choose to grasp the 

nettle gain so much benefit from doing so. 

change 

what 

we do 

Verification 

communication 

Reporting Dialogue 

define key 

relationships 

leadership 

purpose values 

success 

model 

measurement 

7.tips 

games 

trivia 

According to a recent article by 

Claire Grinton published in 

the Huffington Post, 

Pepsi and Coke are at it again. 

This time, however, they aren’t 

pushing for market share; 

instead they are trying to outsmart 

each other in their social 

responsibility campaigns. 

Let us take a look at their two 

major CSR campaigns and the 

tactics and overall approach 

at trying to win the CSR race.

the pepsi challenge - are they 

up for it? 

category coca-cola pepsico 

csr campaign 

goal 

approach 

strengths 

weaknesses 

link to core 

business 

Live Positively 

Campaign 

A collection of projects guided by the company’s stated 

commitment to make a positive difference in the world 

through sustainability (focus on climate protection, balanced 

living, education, community) 

Coca-Cola connects individual consumers with their 

external partners (Boys and Girls Club of America, scholarship 

programs, Civic Action Network, other youth inspiration 

organizations and initiatives) 

Tradition: Coca-Cola has a timeless message: Coca-Cola is 

joy through sharing and connection. Its messages always 

stand for happiness, togetherness and sharing. 

Too traditional? A traditional continuation of the commitment 

they’ve been making for decades, so not causing as much hype. 

Coca-Cola addresses childhood obesity and supports an after 

school program in the USA that teaches kids about nutrition, 

exercise and teamwork. 

Pepsi Refresh Project 

Promises grants in one of for amounts ($5k, $25k, $50k, and $250k) 

to people, businesses and non profits to submit ideas that will have 

a positive impact on the world (in health, arts and culture, food and 

shelter, the planet, neighborhoods and education). 

PepsiCo connects directly with its consumers Visitors to the site 

vote on the ideas posted, and PepsiCo selects finalists, then links 

grant recipients with others who support similar causes for 

increased impact 

Cutting Edge: A huge step for a corporation as large as Pepsi to 

devote all of the money they'd typically spend on a Super Bowl ad, 

the red carpet event of advertising, on helping individuals create 

the change Pepsi talks about in their advertisements. 

Cutting Edge: A huge step for a corporation as large as Pepsi to 

devote all of the money they'd typically spend on a Super Bowl ad, 

the red carpet event of advertising, on helping individuals create 

the change Pepsi talks about in their advertisements. 

PepsiCo only mentions health as one of the areas that grants support, 

but does not address the health problems related to their product.

find 10 terms related to corporate governance 

Upcoming Events 

References 

date: april 23, 2010 

event: mit sustainability summit 

details: cambridge, ma, usa 

date: may 4-5, 2010 

event: 9th annual responsible business 

summit by ethical corporation 

details: london, uk 

10 Saidi and Kumar 

11 Saidi and Kumar 

12 http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/busi 

ness/2006/October/business_October88.xml&section=business 

13 http://qfc.economist.com/tabid/88/Default.aspx 

14 http://www.gulfbase.com/site/interface/NewsArchiveDetails.aspx?n 

=90082 

date: may 18, 2010 

event: league of arab states and 

riyadh chamber of commerce 

details: riyadh, saudi arabia 

15 http://gulfnews.com/business/economy/corporate-governanceand-economic-growth-1.441767 


17 http://www.highbeam.com/doc/1G1-187928721.html 

date: september 14-15, 2010 

event: csr asia summit 

details: hong kong 

18 http://www.executive-magazine.com/getarticle.php?article=12655 

19 http://qfc.economist.com/tabid/88/Default.aspx

www.tamkeenconsult.com

corporate governance - Tamkeen Consult homepage

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